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Applied Materials, Tokyo Electron Scrap Merger

California-headquartered manufacturing corporation calls off $10 billion bid after opposition from U.S. Department of Justice.

TOKYO – Japanese semiconductor equipment maker Tokyo Electron and U.S. rival Applied Materials cancelled their merger Monday after U.S. competition regulators rejected the multi-billion dollar deal.

The announcement comes several days after Comcast and Time Warner Cable scrapped their mega-merger plans, due to opposition by the Department of Justice to the $45 billion tie-up of the cable and broadband Internet giants.

Applied Materials said it had called off its nearly $10 billion bid for Tokyo Electron, first announced in 2013, after proposed tweaks to the deal had failed to convince DoJ antitrust officials. The deal would have combined the two largest providers of non-lithography semiconductor manufacturing equipment.

Both make machines that prepare silicon wafers for imprinting with the circuits that turn them into processors.

The Justice Department, explaining its opposition to the deal, said that the proposed remedy to its concerns “would not have replaced the competition eliminated by the merger, particularly with respect to the development of equipment for next-generation semiconductors. … The semiconductor industry is critically important to the American economy.”

Tokyo Electron said its board of directors agreed to the cancellation because “there remains a gap between the view of Tokyo Electron and Applied Materials and the view of the United States Department of Justice, and it became apparent that such a gap will not be able to be bridged.”

Neither company will pay termination fees, they said.

Shares in Tokyo Electron shares plunged almost 15% Tuesday to close at 6,557.0 yen, about $55, after the announcement. Applied Materials tumbled more than 8% to $19.97.

“Investors are disappointed. People expected the merger to create a market leader,” Mitsushige Akino, executive officer at Ichiyoshi Asset Management, told Bloomberg News. “Now Tokyo Electron has to find a way to go it alone. If it doesn’t, we can expect the shares to fall.”

Copyright Agence France-Presse, 2015

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